[ad_1]
Mike Lynch, the wealthy technology founder once hailed as Britain’s answer to Steve Jobs, oversaw a “multi-year, multi-layered fraud” that induced Hewlett-Packard to pay $11 billion for his software company Autonomy, they said. prosecutors told a US jury in California on Monday at the start of his criminal trial.
Lynch “told a fabulous story” about the company’s finances, prosecutor Adam Reeves said in federal court in San Francisco.
“HP ate it up: They thought this type of software company was exactly what they needed,” Reeves said.
Autonomy co-founder Lynch and former financial executive Stephen Chamberlain are accused of conspiring to inflate the company’s revenue starting in 2009 and end HP’s disastrous 2011 acquisition of the company.
After the deal, HP wrote down the value of the British company by $8.8 billion a year, claiming it had discovered serious accounting irregularities.
Prosecutors accuse Lynch and Chamberlain of fattening Autonomy’s finances through backdated deals and “back-and-forth” deals that delivered cash to customers through sham contracts. Part of the purpose was to attract buyers like HP, prosecutors said.
At the trial scheduled for late May, jurors will be able to hear from dozens of witnesses, including Leo Apotheker, the former HP CEO who was fired weeks after the Autonomy deal was announced.
Lynch’s lawyers have said in court that he is considering testifying in his own defense at trial, where he faces 16 counts of fraud and conspiracy. Chamberlain faces 15 charges.
Both men are presumed innocent. The 12-person jury must reach a unanimous verdict to find either man guilty.
The implosion of autonomy sparked more than a decade of legal battles for Lynch.
HP substantially won a civil lawsuit against it and Sushovan Hussain, Autonomy’s former CFO, in London in 2022, demanding $4 billion in damages.
Hussain was convicted separately on U.S. charges in 2018. Months later, prosecutors filed charges against Lynch and Chamberlain.
Lynch fought extradition but was eventually brought to the United States to face the charges after Britain’s High Court refused him permission to appeal last year.
U.S. District Judge Charles Breyer, who is overseeing the trial, granted Lynch bail secured by a $100 million bond but restricted him to a home in San Francisco under 24-hour surveillance.
Lynch’s attorney has said in court that his net worth is around $450 million.
Hussain was convicted of 16 counts in a jury trial before Breyer in 2018. He was released in January after serving a five-year sentence.
In the civil suit, a British judge ruled in January 2022 that Lynch had planned an elaborate fraud to inflate the value of Autonomy, meaning the Silicon Valley company was substantially successful in its civil case.
Lynch had said that HP didn’t know what it was doing with Autonomy and didn’t understand its technology.